EU Starts Talks with China Over Fabric Issue

It is reported that EU has opened discussions with mainland China Over the Textile issue of importing fabric and Clothing from the latter.

The EU's Trade Commissioner, Peter Mandelson, has reportedly opened discussions with mainland China over the latter's exports to the EU of Textile products after the end to quotas, which have been in place since June 2005 and which are scheduled to expire at the end of this year.

Hong Kong's trading community will recall that quotas on imports of Textile and Clothing products imposed under the WTO Agreement on Textiles and Clothing were lifted some years ago -- on 1 January 2005 to be exact -- when that Agreement came to an end. The subsequent swell in imports of Textiles and Clothing led to the introduction of the current quotas, pursuant to a bilateral agreement between the EU and mainland China.

However, from 1 January 2008, Textiles originating in mainland China should no longer be subject to quantitative restrictions under the bilateral agreement between the two trading blocs. This is the result of talks held between Peter Mandelson and mainland China's Commerce Minister Bo Xilai, who, during the annual EU-mainland China trade summit held on 12 June 2007, reached consensus on a number of issues, including an agreement to continue dialogue and cooperation on Textiles so as to maintain the steady and smooth development of their bilateral trade in this sector.

The EU's automatic licensing system is scheduled to continue in place so that the EU can continue monitoring market developments and discuss any actions which need to be taken, to ensure a smooth transition from the Textiles agreement to normal trading conditions.

The aim of the recently opened discussions is, reportedly, the establishment of a collaborative system to monitor imports of Textiles and Clothing into the EU. Under the joint Monitoring system, the mainland Chinese authorities would be obliged to provide documentation that confirms the origin of Textile products, which would then be verified by EU customs authorities.

EuroCommerce, which represents retail, wholesale and international traders in Europe, apparently indicated concerns over the proposed Monitoring system, fearing that it might lead to the reintroduction of quotas, which would cause disruption to retailers' and wholesalers' activities.

In the meantime, in a 24 September 2007 statement addressed to Italy's Textile manufacturers, Commissioner Mandelson provided advance warning of the fact that the quotas will expire at the end of 2007, pointing out that the "breathing space" provided by the current interim regime has kept the rise in imports from China at a manageable level and given European industry a further period to adjust.

Mandelson also stated that the EU and its Member States can support the EU Textile producers affected, by negotiating lower tariffs for EU Textile exports to third countries, and by fighting Trademark infringements. The Commissioner indicated that the EU is "willing to step in when trade is unfair", and referred to the anti-dumping case on leather shoes from mainland China.